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AVI Biopharma’s CEO, Chris Garabedian, said when he took the job a year ago that he wanted to build an independent biotech company for the long haul. Key to the plan was the idea that the Bothell, WA-based company (NASDAQ: AVII) would retain full ownership of its drug candidate for Duchenne Muscular Dystrophy, and drive it all the way through the FDA and to the U.S. marketplace.

One year later, after some clinical trial results underwhelmed Wall Street, Garabedian says he is reconsidering the go-it-alone strategy. That includes seeking help, and possibly giving up partial ownership in the drug, to a partner to help keep the drug moving forward in development.

“Coming out of this week’s news, I’m considering different options than I might have previously, in terms of considering a partnership,” Garabedian said in a phone interview on Wednesday. “There was a lot of partnership interest before the data—and there have been a lot of e-mails from partners after. A lot of pharma companies are encouraged by the dystrophin data. And they have large balance sheets, and the ability to fund a pivotal study.”

Chris Garabedian

AVI is in the position of looking for help from a partner after a rough few months on its own. Back in December, the company cut 28 percent of its workforce after missing out on a potentially lucrative federal contract to produce RNA-based drugs against pandemic flu. While that program would have helped provide AVI with some stable R&D support, the company’s loftier goal has been to come up with the first drug for Duchenne Muscular Dystrophy that works by compensating for a protein abnormality at the root of the disease, rather than just treating the symptoms. About 31,000 people in the U.S., Europe, and Japan are thought to have the disabling genetic disease. A great drug for a rare disease like Duchenne, Garabedian has said, could be the building block for a great business like that of Cheshire, CT-based Alexion Pharmaceuticals (NASDAQ: ALXN).

A lot of big decisions will have to be made at AVI Biopharma this year, after some mixed data has made it tougher on the company to follow in the footsteps of Alexion. Here’s what we learned this week: AVI showed in a mid-stage study that boys with Duchenne Muscular Dystrophy were able to produce about 22.5 percent of normal dystrophin levels in muscle biopsies after 24 weeks on the therapy, while there was no increase on the placebo. Dystrophin is important to watch for in these boys’ muscle fibers because they lack the protein, which is needed for normal muscle function that enables them to walk. Unfortunately for the patients and for AVI, the increase in dystrophin levels didn’t translate into a clinical benefit at the 24-week check-up, when doctors measured the distance the boys could walk in a standard 6-minute test.

Even though the finding was hailed by the lead investigator as a “major advance”—it was the first time anyone had shown in a placebo-controlled study that a drug could increase dystrophin—AVI’s stock has tumbled more than 30 percent on the news, to $1.01 a share at yesterday’s close. That decline in value will make it more difficult for AVI to raise the money it will need to finance further development of the drug. And that’s a concern at a company that entered this year with about $40 million in cash and investments in the bank, and a plan to run a $30 million to $35 million operating loss this year.

If things turn out positive for AVI, it could still be in a financial bind. It’s possible that AVI will get encouraging follow-up data from an analysis of patients after 48 weeks. If that happens, the next natural step would be to run a much larger, more costly clinical trial over the next two years. And given what has happened to AVI’s stock, it will have a hard time raising that kind of cash on its own.

“My vision of the company when I came on board still holds true, but the realities of the marketplace sometimes constrain you,” Garabedian says. “We’re at a $150 million market cap [now $137 million] and a pivotal trial would probably require two more years of capital. You can do the math.” He added: “We’ll have to put all options on the table, and consider the trade-offs.”

Debra Miller, the co-founder and president of CureDuchenne, a patient advocacy group that has helped finance the development of AVI’s eteplirsen compound and drugs from many other companies, was a bit baffled by the investment community’s reaction.

“It’s positive,” Miller says. “We’d have all loved to see functional improvement, but I’m still positive. The fact that it’s safe is wonderful news. And the fact we can have 20 percent of normal dystrophin showing up in a muscle cell where there was none before, is remarkable.”

Jeff Chamberlain, a muscular dystrophy researcher at the University of Washington who has advised AVI and CureDuchenne, was similarly optimistic. “Without seeing more detail I can’t say too much, other than to say that I believe generating dystrophin expression in 22 percent of the myofibers at biopsy sites is very, very encouraging. They have not yet seen a clear clinical benefit, but I think it is fair to say that it might take much longer for that to be measureable. It depends also on how much dystrophin is in each fiber. However, our studies in mice suggest that making even low amounts of dystrophin in 20 percent or more of myofibers will significantly slow progression of the disease and could be expected to increase strength over time.”

Miller, the patient advocate, said she’s hearing similar feedback from scientific advisors. “The Duchenne community was more excited about the results than Wall Street,” Miller says. “We’re not jumping up and down, and we don’t think this will happen overnight, but it’s definitely encouraging.”